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Home My WebLink About15.D.4. Requesting Advancement of Municipal State Aid Funds-Res. No. 6009 15,DiLl CITY OF SHAKO PEE Memorandum TO: Mayor & City Council Mark McNeiII, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Consider Resolution to Obtain Advance Encumbrance Funds from Mn/DOT State Aid Construction Account DATE: February 3, 2004 INTRODUCTION: Attached is Resolution No. 6009, a resolution requesting approval of advanced financing from Mn/DOT Municipal State Aid Funds. BACKGROUND: The City of Shakopee does receive Municipal State Aid Funds from MnJDOT. The City of Shakopee is over 5,000 in population and a portion of the gas tax is dedicated for Municipal State Aid roadways. In this coming 2004 construction year, the City is looking at constructing 4th Avenue, from Naumkeag Street to Shenandoah Drive and Viking Steel Road, from 4th Avenue to C.R. 101. Both of these street segments are on the State Aid System. Attached to this memorandum is a copy of the MSAS General Advancement Guidelines, in which Cities in the Municipal State Aid System can advance funds beyond their fund balance up to five times its previous year's construction allotment, which in Shakopee's case is $2,690,000.00. With the City of Shakopee being a growing City, the City can apply for advancement for these funds and can obtain these funds sooner than waiting for the aIIocations to made in future years. The advanced funds need to be paid back within 5 years and are deducted annuaIIy from future allocations according to a schedule that is agreed upon between the City of Shako pee and Mn/DOT. The City's aIIocation for 2004 is approximately $707,000.00. In order to start this process, an initial resolution is needed indicating to the Mn/DOT Municipal State Aid Department the amount that the City may choose to have advanced. These funds are paid out on a first come first serve basis. If the City is successful in obtaining these funds, these could be applied to Vierling Drive, VaIIey View Road, 4th Avenue and Viking Steel Road projects, in which the City does have assessment costs and tax levy costs in the building and rebuilding of these collector streets. A City Council resolution is required to advance funds for a Municipal State Aid street projects, Attached to this memo is Resolution No. 6009, and would allow us to start the proceedings on whether advanced funds would be available to the City. After a specific project has been authorized for completion, payment requests can be made and the State can then advance payment to the City as allowed in their procedure. By advancing Municipal State Aid Funds earlier, the City would have use of this money for building and rebuilding of City collectors, such as Vierling Drive, Valley View Road, 4th Avenue, Sarazin Street and 17th Avenue. Also, the City would be able to withdraw State Aid funds from the State to the City earlier and earn interest on those funds until they are utilized. ALTERNATIVES: 1. Adopt Resolution No. 6009, a resolution requesting approval of advanced financing on approved Municipal State Aid street projects in the City of Shakopee. 2. Deny Resolution No. 6009. 3. Table Resolution No. 6009, to allow time for staff to prepare additional information as directed by City Council. RECOMMENDATION: Staff recommends Alternative No.1, to request approval of advanced financing in approved State Aid street projects for the City of Shakopee. This resolution would allow the City to be prepared in order to obtain advanced funding, if it so desires, for previous State Aid projects not yet finalized and as State Aid projects are ordered and constructed in 2004. If the City Council chooses not to advance any funds at a later date, it could direct staff not to apply for advanced funding. ACTION REQUESTED: Offer Resolution No. 6009, A Resolution Requesting Approval of Advanced Financing on Approved Municipal State Aid Projects in the City of Shakopee in an amount up to $2,690,000.00 dollars and move its 1li10Pti~~ .?". Bruce Lonex Public Wo s Director BUpmp MEM6009 January 23, 2004 MSAS GENERAL FUND ADV ANCES Revised June 1999 November 2000 November 2002 June 2003, October 2003 Guidelines General Fund Advance for State Aid Projects Any city may advance up to a cumulative maximum of five times its annual construction allotment or $4,000,000 whichever is less. This amount may be exceeded by advances for Federal Aid projects. The maximum Municipal State Aid construction dollars that can be advanced from the General Fund account in anyone year shall be the difference between the Municipal State Aid construction fund balance at the end of the preceding calendar year, current year projected disbursements, and $20 million. SALT may revise the amount of the required reserve as the year progresses. A City Council Resolution is required to advance funds for an MSAS project. A sample resolution can be found in the State Aid manual (Fig. I 5-892.563). The City Council Resolution can be passed at any time, but must be submitted with or prior to, any payment requests. It need not be project specific, but must include the maximum amount of advance the City Council is authorizing for financing approved Municipal State Aid Street projects. A mutually acceptable repayment schedule not to exceed five years shall be included in the resolution. The resolution should be mailed directly to State Aid Finance. The resolution does not reserve the funds. The funds are paid on a first come first served basis established by payment requests. As payment requests are processed by State Aid Finance, the amount on the 'State Aid Payment Request' form (up to the resolution/allowable amount) will be deducted from the city's account. To "reserve" the funds, the City Engineer may submit a "Request to Reserve Advanced Funding" form (Fig. G 5-892.563) up to 8 weeks prior to anticipating or incurring an obligation where advanced funding is required. This form "reserves" the funds in the city's account. Once the request has been approved by State Aid and the funds added to the city's account, a copy of the approved request will be returned to the City Engineer. The "Request to Reserve Advanced Funding" form should be mailed to Sandra Martinez in State Aid Finance. This form is not required, but will allow the funds to be set aside up to eight weeks in advance of the payment request. General Fund Advance for Federal Aid Projects Cities may advance for Federal Projects that are programmed by the ATP in the STIP and are eligible for State Aid financing. Repayment to the General Fund will be made at the time federal funds are converted. The city will agree to authorize repayments from their state aid account or from local funds under a mutually acceptable repayment schedule 107 should said project fail to receive Federal funds for any reason. (Fig. J 5-892.563 in the State Aid manual) A City Council Resolution and an Advance Construction Agreement are required to advance funds for a Federal Aid project. A sample resolution can be found in the State Aid manual (Fig. J 5-892.563). The actual Agreement that must be processed will be written by Lynnette Roshell. Contact her directly at (651) 282-6479 to get the agreement started. This resolution must be project specific and must include the maximum amount of advance the City Council is authorizing. The resolution and signed Agreement should be mailed directly to Lynnette. Additional Guidelines General Fund Advance repayments may be relaxed to accommodate the payment on the principal of State Aid bonds. In anyone year, if the maximum advance amount available is reached, a city has to submit a new city council resolution when more funds become available the following year. Advances will always be processed on a 'first come first served' basis. All revisions to these guidelines are ultimately an administrative decision by the State Aid Engineer with any input and discussion by the Screening Board being taken into consideration. 108 RESOLUTION NO. 6009 A Resolution Requesting Approval Of Advanced Financing On Approved Municipal State Aid Projects In the City of Shakopee WHEREAS, the City of Shakopee started projects in 2003 and is planning on implementing Municipal State Aid Street Projects in 2004 which will require State Aid funds in excess of those available in its State Aid Constmction Account; and WHEREAS, said City is prepared to proceed with the constmction of said projects through the use of advance encumbrances from the General State Aid Constmction Account to supplement the available funds in their State Aid Constmction Account, and WHEREAS, repayment of the funds so advanced will be made in accordance with the provisions of Minnesota Statutes 162.14, Subdivision 6 and Minnesota Rules, Chapter 8820. NOW, THEREFORE BE IT RESOLVED: That the Commissioner of Transportation be and is hereby requested to approve this advance for financing approved Mlmicipal State Street Projects of the City of Shako pee in an amount up to $2,690,000.00 in accordance with Minnesota Rules8820.1500, Subparagraph lOb, and to authorize in five equal annual installments from subsequent accmals to the Municipal State Aid Street Constmction Account of Municipal State Aid Street fund for said City. Adopted in session ofthe City Council ofthe City of Shakopee, Minnesota, held this day of .2004. Mayor of the City of Shako pee ATTEST: City Clerk